Financial & Regulatory Review Financial Strength Exceptional Member Experience Improving Members Financial Well-being

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3 Improving Members Financial Well-being Financial Well-being is different for every person. For some, it means being prepared financially to continue your education, travel, finance a vehicle, purchase a home, retire, or be prepared for an unplanned illness or disability. We are continuing to improve the breadth of resources available to our members for Improving Financial Well-being beyond products that offer low or no fees and attractive loan and savings rates. We believe Financial Education creates Financial Success, and we are thrilled to now have our Financial Well-being Center with 23 online financial education modules available on Home Buying, Auto Buying, Credit Card Management, Credit Score Improvement and many more topics. We encourage all members to also review the valuable video resources on cybersecurity, phishing and new threats to your information security. Financial Strength During 2016, member deposits increased by 10.7 percent or $32.2 million; with strong growth in Savings, Checking, Money Market, and Certificate portfolios. Total Assets increased by $36.8 million in 2016, bringing Foothill s asset size to $382 million, a 10.7 percent increase. We sustained a strong Net Worth position in 2016, ending the year with a Capital, or Net Worth ratio of percent. Our earnings, or Return on Assets (ROA), for the year was 1.14 percent, a ratio comparing very favorably with the peer average of 0.51 percent. Delinquency remains low, Foothill s ratio at 0.38 percent of total loans as of December 31, For comparison, NCUA peer credit unions reported delinquency of 0.92 percent at year-end As you can see from these key metrics, your credit union is financially strong and growing. Financial & Regulatory Review For 2016, Foothill s annual opinion audit was performed by Richards & Associates, a CPA firm. The result was an unqualified opinion on our financial statements and reports. We are also examined by our regulator, the National Credit Union Administration (NCUA), both of these reviews have recommendations for strengthening our processes or systems and our management team is dedicated to addressing each of these recommendations. Exceptional Member Experience During 2016, we made many important service and security improvements: We introduced the Net Promoter System in April 2016, with surveys that allow us to get prompt member feedback and respond to As we are learning the road or path to Financial Well-being is different for everyone; but one thing you can count on is Foothill being ready and available to help our members reach their financial goals.

4 member inquiries in a timely manner. We welcomed 1,150 new members, an increase of 4.5 percent for the year. This compares very favorably with peer credit union new member growth of just 2.24 percent for We completed a Breakroom Makeover for one of our local schools; Santé Fe Middle School revealed on August 16th, 2016, the video is available on our Website. We completed the re-issue of Euro MasterCard Visa (EMV) or Chip cards for all Debit and Credit cardholders. EMV cards have embedded computer chips that make card fraud more difficult to achieve, improving the security of transactions. We introduced CardNav, a mobile application that allows members to control spending limits and temporarily deactivate/activate their Debit Card(s) in real time for added security. We updated our mobile banking app to allow Touch ID finger access, making the logon process quicker and safer. We began offering Living Trust Seminars, reviewing the proper planning needed to protect your estate wishes and transfer assets to your heirs. Looking Ahead to 2017 In 2017, we will introduce Credit Union members to The CO-OP Shared Branching Network, the same Credit Union organization that makes 4,800 ATM s in California and 30,000 ATMs available nationwide to all members, all surcharge free. The Shared Branching network includes 5,000 branch locations nationwide, several along the 210 freeway corridor. We anticipate that this new service will improve convenience for thousands of our members residing in communities east of our Glendora facility, as well as members who have moved out of the San Gabriel Valley area but wish to keep their accounts with us. We are now partnering with the Richard Myles Johnson Foundation to host financial literacy courses called Bite of Reality in several economic classes at our local high schools. Bite of Reality is a program designed for high school seniors, allowing them to experience the challenges of making adult financial decisions on housing, transportation, entertainment and child care, all during a fast paced interactive simulation using their smart phones or tablets. So far, Glendora and Monrovia High Schools have benefited from this fun and informative program, improving their financial literacy and the future generation s Financial Well-being. We are still evaluating Identity Theft Prevention options that would help protect members and their accounts should any personal or card information be compromised. In the meantime, we encourage all members to take advantage of the online training and security videos available in the Financial Well-being Center on our website. Board and Supervisory Committee It is with regret that we bid farewell to Board Member Jill Underwood this year. We have benefited from her leadership and support as a Board Member with Foothill for over 12 years. Ms. Underwood is retired from the Methodist Hospital where she worked for 34 years, most recently as the Vice President of Human Resources. Jill then served as Interim VP of Human Resources at Azusa Pacific University from March 2014 to March Jill now volunteers her free time at Rising Stars Equine Therapy Ranch. We wish her the very best in retirement and in the years ahead. We are fortunate to welcome Rafael Soriano, as our newest Board member. Mr. Soriano is a 26 year employee of Methodist Hospital and currently the Senior Manager of Information Systems. Mr. Soriano has been serving on Foothill s Supervisory Committee since 2014 and brings tremendous knowledge of technology, cybersecurity and information systems, all areas of growing importance to you and your credit union. In 2016, we welcomed Kevin Hryciw as the newest member of Foothill s Supervisory Committee. Kevin is the Assistant Superintendent of Human Resources, for Arcadia Unified School District, and will be completing his Doctorate of Education in May The experience and integrity that Kevin brings to the Supervisory Committee will help our organization better serve the interests of the educational community. We Thank You The Board of Directors and the entire Foothill Team are grateful for the continuing loyalty and support from our members and are committed to providing excellent banking products and valuable tools to help all members Improve Their Financial Well-being in the years to come. Respectfully, Brian Hall, President/CEO Scott McCulley, Board Chair

5 Over 780 Hours Volunteered to our Partners & Community Community Service Partners Children s Miracle Network Foothill Unity Center Glendora Education Foundation LaVerne/San Dimas Educational Foundation So. Pasadena Education Foundation Arcadia Rotary Club Rotary Club of Glendora Covina Rotary Club City of Hope Foundation Methodist Hospital Foundation Citrus College Foundation City of Azusa City of Arcadia

6 Interest on Loans 7,738,205 6,769,099 Interest on Investments 3,404,459 3,063,275 Total Interest Income 11,142,664 9,832,374 Dividends on Members' Shares 1,122, ,547 Interest on Borrowed Funds 465, ,527 Total Interest Expenses 1,588,413 1,134,074 Net Interest Income 9,554,251 8,698,300 Provision for Loan Losses 460, ,337 Net Interest Income after Provision for Loan Losses 9,093,307 8,556,963 Service charges and other income 4,281,079 3,873,270 Other Operating income 35,493 26,165 Gain on property and equipment - 3,000 Mortgage Loan Sale and Other Fees 683, ,431 Gain on sale of loans - 2,141 Gain on sale of investments 38,998 99,014 Total Non-Interest Income 5,038,958 4,545,021 Salaries and Benefits 5,266,294 4,858,784 Office operations 2,344,452 2,138,117 Other expenses 2,136,245 2,006,136 Other operating expenses 29,730 26,165 Loss(gain) on non-operating activities 130,000 - Total Non-Interest Expense 9,906,721 9,029,202 Net Income 4,225,544 4,072,782

7 Balance Sheet Assets Cash and Cash Equivalent 25,471,682 34,885,931 Investments 148,485, ,253,294 Loans Receivables, Net of Allowance for Loan Losses 196,830, ,311,599 Accrued Interest Receivable 812, ,259 Property and Equipment, Net of Depreciation 2,906,851 2,606,981 NCUA Share Insurance Deposit 3,155,807 2,858,308 Prepaid Expenses and Other Assets 4,620,389 4,657,493 Total Assets 382,283, ,429,865 Liabilities Member Shares 332,286, ,002,213 Accounts Payable and Other Liabilities 5,377,773 4,293,669 Total Liabilities 337,664, ,295,882 Members' Equity Appropriated (regular reserve) 2,507,811 2,507,811 Unappropriated (undivided earnings) 44,120,286 39,894,742 Equity acquired through merger 176, ,555 Accumulated Other Comprehensive Income (2,184,940) (445,125) Total Member' Equity 44,619,712 42,133,983 Total Liabilities and Members' Equity 382,283, ,429,865

8 Foothill Federal Credit Union s Supervisory Committee is an independent committee that can have up to five committee members appointed by the Board of Directors that serve on behalf of the membership. The Supervisory Committee oversees accounting practices and ensures that the Board and Management are directing the credit union s operations in compliance with applicable regulations and safeguarding your assets. The committee s responsibilities include: Selecting a CPA firm to perform the annual external audit Ensuring that internal audit work is performed in a thorough and timely manner Assessing the adequacy of the credit union s internal controls Guarding against potential fraud and other losses that could adversely impact the membership Reviewing internal controls and making recommendations for improvement to the Board The Supervisory Committee contracted with Richards and Associates (Richards), a CPA firm specializing in credit union audits, to conduct the external audit of the credit union s financial statements as of and for the year ending December 31, Richards continues to perform well in their auditing role and providing insightful information to the Supervisory Committee. The Supervisory Committee has approved the audited financial statements and is in concurrence with the auditors that the statements do present fairly the financial position of the credit union as of December 31, On behalf of the Supervisory Committee, I want to thank the Board of Directors and team members of Foothill Federal Credit Union for their dedication to protecting member assets and operating with integrity and sound business practices. David Jaynes Supervisory Committee Chair Supervisory Committee (L to R): Kevin Hryciw, Member, Andrea Garcia-Ortiz, Member, David Jaynes, Chair, Rafael Soriano, Member Marc Chaldu (not pictured) Board Members (L to R): Scott Petterson, Vice Chair, Scott McCulley, Chair, Linda Dempsey, Treasurer, Tamara Murphy, Secretary, Fred Weiss, Director, Marc Chaldu, Director, Jill Underwood, Director Executive Team (L to R): Ashley Smith, Executive Assistant, Chris Andersson, VP of Operations, Jackie So, VP of Finance, Judy Schaeffler, VP of Lending, Brian Hall, CEO, Gabriel Juan, VP of Technology